Utilities just got a new financial tool that could speed the end of coal plants in Kansas

by Brian Grimmett, Kansas News Service

Lawmakers basically let utilities refinance the cost of their old power plants. And if they get the debt from those coal-fired facilities off the books, they can shut them down and switch faster to renewable energy sources.

Wichita, Kansas — Utility companies in Kansas will soon have a new accounting tool that could speed the closure of coal-fired power plants — and save customers money.

The financial tool is known as securitization. It’s not a new idea, but it is complex. The Kansas Legislature passed a bill approving the use of the tool after more than two years of discussion.

Here’s what you need to know about the change, and how it could remake how utilities generate electricity in Kansas.

What is securitization?

It’s a way for a utility company to refinance what it owes on some of its large investments — think mostly coal plants — at a much lower interest rate.

Instead of paying off an old loan at a higher interest rate, a utility can clear the debt from building a plant off its books, replacing that cost with a lower-interest bond backed by bill-paying customers.

And while the debt is paid off through the new bonds, the utility has new freedom to switch to cheaper sources of energy like wind, solar.

How will this save customers money?

One key is how the sort of return utility shareholders are promised by state regulators. Without the refinancing, they’re promised about a 9% return on the money they invested in an old power plant. With the refinancing, the company no longer makes a return on the plant and customers only have to pay the interest from the bond — about 2%.

Closing a plant also eliminates operational and maintenance expenses. If replaced with renewable energy, a closure also eliminates fuel costs. A utility company doesn’t make money on that fuel, but does pass the expense on to customers.

Ashok Gupta, an energy economist with the Natural Resource Defense Council, said replacing coal with renewable energy is better for the environment, less expensive to operate and provides utilities with new investment opportunities.

“That’s what creates this win-win-win for utilities, their customers and the environment,” he said.

State regulators won’t sign off on any plan unless utilities can show that the total costs of retiring and refinancing a plant and any new investments won’t increase customers’ bills.

What could go wrong?

Some environmental advocates worry that the tool won’t be used to replace aging coal with renewable energy. They wanted rules demanding that new investments go toward renewable energy.

“We do a disservice to our state, to our citizens and to the environment if what happens is we retire the coal plants and instead build a whole bunch of gas plants,” said Dorothy Barnett, the executive director of the Climate and Energy Project.

What incentives does a utility company have to use the tool?

It’s all about money. Operating aging coal plants is expensive, and increasingly unprofitable. As long as those investments are still on the books and running, there’s only so much new investment regulators will let a company make.

Evergy lobbyist Jason Klindt said without access to this low-cost type of financing the best course of action for the company would be to keep coal plants running. That’s because it would be the only way to provide the return its shareholders expected.

So if everybody wins, why didn’t regulators let utilities play with the books like this before?

Before the effort to transition away from fossil fuels started to gain steam, utilities didn’t have much reason to think about shutting fossil fuel plants down early. The coal plants were essential, cheap and working the way the utilities thought they would when they made the original investment 40 – 50 years ago.

But the transition is happening. Renewable energy is cheaper and cleaner than coal.

Is anybody else doing this?

About 20 states have some kind of securitization law. In the past few years, the concept has become more popular as utility companies look for ways to transition away from fossil fuels.

Some states have also used the tool to help pay for repairs when natural disasters destroy infrastructure. In Kansas, natural gas companies have said they’re interested in using the tool to cover costs that came with when natural gas prices spiked during the February cold snap.

Brian Grimmett reports on the environment, energy and natural resources for KMUW in Wichita and the Kansas News Service. You can follow him on Twitter @briangrimmett or email him at grimmett (at) kmuw (dot) org. The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.
Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.
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Amtrak going daily again in Kansas, easing worries about future of passenger rail in the state

by David Condos, Kansas News Service

Amtrak plans to restart daily passenger service on its Southwest Chief route across Kansas beginning May 31.

In October, Amtrak cut the line’s daily service down to three days a week because of the pandemic. But the company says new federal COVID-19 relief funding will allow it to restore daily service on the Southwest Chief and 11 more of its long distance routes over the next few months.

The Southwest Chief, the only Amtrak service in Kansas, runs from Chicago to Los Angeles and includes local stops in Kansas City, Topeka and Dodge City.

For southwestern Kansas communities like Garden City, the route provides a connection with the rest of the state and the region.

“When you live in an area like this that’s very remote,” said Lona Duvall, the president and CEO of the Finney County Economic Development Corporation, “it’s just too important that people have that freedom of movement.”

In 2018 and 2019, the Garden City station served roughly 7,000 passengers annually in a city of just under 27,000 residents. For reference, Amtrak’s Topeka station served between 8,000 and 10,000 passengers those same years in a city of more than 125,000.

“Those ridership numbers are people,” Duvall said. “They’re people who need to be in a different place for whatever reason, and we have to ensure that we have every opportunity to get them there.”

Amtrak also announced a long-term plan recently to add a new route that would connect the Southwest Chief to Oklahoma and Texas through the station in Newton, Kansas.

The line is part of Amtrak’s vision to add more than 30 new routes nationwide over the next 15 years using money from President Joseph Biden’s proposed American Jobs Plan. It would also bring passenger rail service to Wichita for the first time since 1979. Biden has long been an Amtrak booster.

Duvall says that connecting Garden City with Oklahoma and Texas, places where many southwestern Kansans already have family and business connections, opens up new doors for the community.

“Obviously, rail lines only go where rail lines go,” Duvall said. “So being able to open up new markets where we can travel to and from is huge.”

Nationally, ridership on the Southwest Chief was down 43% in 2020, the largest drop of any of Amtrak’s long distance lines. But even before the pandemic, the Southwest Chief was in danger of being discontinued.

Duvall says there have been multiple instances over the past decade when Amtrak said it may have to cut service to Garden City entirely because of the steep costs of necessary updates to the rail line.

“But each time,” Duvall said, “we rallied.”

In 2018, senators from Kansas, Colorado and New Mexico reached an agreement to fund infrastructure improvements along the route with money from Amtrak and federal transportation grants.

But Duvall said the threat of possibly losing Amtrak service in Garden City never quite went away. When the company reduced service last fall, it created some anxiety in town.

“There were certainly folks who thought,” Duval said, “‘Uh oh, are they going to use this as an excuse to never come back?’”

But she says Amtrak’s recent announcement — and the possibility of an additional $80 billion in new federal money for passenger service infrastructure — means that she and other Garden Citians can feel a bit better about the future of rail in southwestern Kansas.

“We’re all breathing a big sigh of relief.”

David Condos covers western Kansas for High Plains Public Radio and the Kansas News Service. You can follow him on Twitter @davidcondos.
The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy. Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to https://ksnewsservice.org/.
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Virtual job fair to be today through Thursday

The KansasWorks statewide virtual job fair will dedicate Tuesday, its first day, to military veterans, their spouses and caretakers.

The job fair, from March 23 to March 25, will open with a veterans’ day.

“Kansas veterans pick up valuable career skills during their time in military service that give them the tools to be successful members of our workforce,” Gov. Kelly said. “The KansasWorks Virtual Job Fair is designed to help elevate those skills, and promote their talents to businesses and employers statewide.”

The virtual fair will allow job seekers to easily live chat with employers from across the state through computers and mobile devices.

To register for the virtual job fair, visit https://kansasworksvirtualjobfair.easyvirtualfair.com/.

The Department of Commerce, in partnership with local Workforce Development boards, moved its statewide job fairs online in 2020 to eliminate public health risks associated with mass gatherings, and to continue providing job opportunities and maintaining a ready workforce for Kansas businesses.

Registration is now required for each virtual event. If job seekers have previously attended a virtual job fair, they are required to re-register for this event with the link above.

“Virtual job fairs continue to be a vital part of our commitment to safely helping Kansans find employment and helping Kansas businesses fill positions,” Lt. Gov. and Commerce Secretary David Toland said. “Our state’s veteran community has some of the most dedicated, persistent and capable people you’ll ever meet. We want them to live and work in Kansas, and setting aside the first day of the fair for our veterans seeking employment is one show of support they richly deserve.”

As concerns for Kansans’ health and safety remain high due to COVID-19, the Department of Commerce will maintain the virtual job fair system, according to a spokesman.

Job seekers can now upload their most recent resume to their virtual job fair account. Those who require assistance may contact their local workforce center at 877-509-6757 to schedule an appointment.